Where the yields are: Carlton, Fairfield, league leaders for residential rental returns

Apartments at 33/8-10 Northumberland Road, Auburn in Sydney. Auburn is Sydney’s third-best yielding suburb for rents, with a gross rental yield of 6.4 per cent.
AFR

by
Ben Hurley

Once affordable middle-ring suburbs in Australia’s eastern capitals are delivering high rental yields to investors, analysis by RP Data finds.

In a joint project with online lender, loans.com.au, RP Data has identified 582 suburbs across Australia with gross yields of 5.5 per cent or more, making them easier to hold long-term in a low capital gain environment.

Sydney

Sydney’s best yielding suburb is Fairfield, adjacent to the fast-growing Parramatta CBD, where apartments are returning a gross yield of 6.5 per cent, according to the analysis, titled Autumn Investors Guide to Australia.

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Victoria

In Melbourne, units in the inner suburb of Carlton had the highest rental yields , with a gross yield of 7.4 per cent, the analysis found.

Carlton was another suburb identified as having high levels of rental stress after soaring rental growth during the Census period. But most Victorian areas identified as high-yielding were outside of Melbourne, in areas like Red Cliffs, about 550 kilometres north-west of the capital, and the farming community of Mildura.

Victoria’s Top 5 rental yields

Suburb

LGA

Property type

Median price

Median rent

Gross yield

Carlton

Melbourne

Unit

$235,170

$400

7.4%

Red Cliffs

Mildura

House

$147,983

$238

7.0%

Mildura

Mildura

Unit

$138,566

$195

6.9%

Merbein

Mildura

House

$146,178

$200

6.6%

Horsham

Horsham

House

$186,822

$250

6.6%

Source: RP Data

Queensland

The analysis also identifies potential capital growth suburbs in south-east Queensland, where residential property is picking up after a difficult few years following the financial crisis.

Houses in the historic town of Grandchester, about 80km west of Brisbane, had a compounding growth rate of 7.7 per cent over the past five years, the analysis found. Other relatively strong performers were apartments in Marsden and Kingston in the Logan City local government area.